COVID-19: The recovery of SMEs will be critical to the future of the UK economy
Following the publication of the latest figures from the Office for National Statistics (ONS) on the impact of the coronavirus (COVID-19) pandemic on the UK economy, Markus Kuger, Chief Economist at commercial data and analytics firm, Dun & Bradstreet, said: “Dun & Bradstreet has upgraded its rating outlook for the UK from ‘deteriorating rapidly’ to ‘deteriorating’ as the government starts to lift coronavirus lockdown measures. As ONS data reveals, 16% of businesses that temporarily closed or paused trading, expect to resume trading operations within the next two weeks while another 9% anticipate opening in the next 2-4 weeks. While we are likely to see an uptick in business activity throughout June as the government is gradually scaling back some lockdown measures, social distancing will remain in place for the foreseeable future, and Dun & Bradstreet forecasts real GDP to contract by a stark 7.0% in 2020.
“Small and Medium sized businesses make up 99% of the UK’s private sector businesses, and their recovery will be paramount for the economy. Prior to the outbreak towards the end of last year, we found SMEs were owed an average of nearly £75,000 at any one time in the last 12 months, and over a third (34%) said timeliness of payments from customers had an impact on their future financial success. Worryingly but not unsurprising, our latest data and analysis found that, after several quarters of improvements, payment performance in April deteriorated across the board for all industries and as we anticipate a severe recession, we expect an increase in the number of business failures in the next few quarters and B2B payments performance will also continue to deteriorate. With 42% of all businesses that have not permanently stopped trading reporting they had cash reserves to last under six months, ensuring that they remain solvent with access to finance is going to be critical for their recovery and future.”